Taking Control of Your Financial Future: 5 Popular Myths About Self-Directed IRAs and the Corresponding Truths

They aren’t easy to set up; you need a professional to help you decide where to invest your money; if you invest in real estate, you will be taxed; these are just some of the myths circulating about self-directed IRAs online.

Self-directed IRAs are retirement accounts that offer the investor complete control over their investment choices. Unlike a standard IRA, with a self-directed IRA, your investment options are not limited to stocks and bonds, but can also include real estate, commodities, and limited partnerships.

Self-directed IRAs don’t have to be difficult to set up. There are a host of companies dedicated to opening self-directed IRAs which offer a streamlined, efficient start up. This means investors are able to quickly begin investing their money without delay or hassle.

But if I sign up with a company they can access my money

This is also a myth. Companies that streamline the sign-up process cannot handle your money, nor do they get access to your accounts. They are merely there to help with the account’s opening and navigate the legal and financial web that comes with it.

Many companies also provide consulting and support, but under no circumstances are they granted access to your accounts. Your self-directed IRA brings your finances under your control, not under the control of anybody else.

You can’t have both a self-directed IRA and a 401K at the same time

Just because you have a 401K plan through your employer doesn’t mean you can’t have a self-directed IRA account too. Providing your total contribution limits stay within the government’s cap, you are free to invest in both a 401K and a self-guided IRA.

This is also untrue. There is extensive regulation surrounding what you can and cannot invest in, including a list of illegal transactions and government disqualified people, however, property is not on that list.

Provided you follow the rules, you are able to invest in real estate with assets in your self-directed IRA. Your self-directed IRA functions in the same way as a standard IRA. The invested opportunities are near infinite.

There is no point in opening a self-directed IRA with a small amount

Wrong. No matter what your IRA balance is, if you want to invest your retirement savings to help them grow, a self-directed IRA can help you do that. It is even possible to co-invest your small balance with another larger account to quickly accrue extra retirement savings.

In the wake of the 2008 financial crash and an uncertain financial environment, an IRA which puts the investor in charge of their finances is becoming increasingly popular. This is driving the interest behind self-directed IRAs as they allow investors to explore other markets, taking their money away from traditional forms of investing and away from financial uncertainty.